Fears That Tort Reform Could Stalemate Terrorism Insurance Bill

By

Washington

Congressional negotiators are trying to hammer out a compromise over terrorism insurance legislation, but some industry lobbyists fear the effort could still become stalemated over the issue of tort reform.

Several lobbyists told National Underwriter that Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., will lead the Senate negotiating team on the issue of tort liability.

This means, these lobbyists say, the House leadership will probably appoint Sen. Leahys House counterpart, House Judiciary Committee Chairman F. James Sensenbrenner, R-Wis., to lead the House negotiators.

And therein, they say, lies the problem. Both Leahy and Sensenbrenner are viewed as ideologues who are less likely to reach a compromise on the controversial issue of tort reform than other members of the House-Senate Conference Committee.

“Chris Dodd and Mike Oxley could work out a compromise on tort reform,” one lobbyist, who asked not to be identified, says, referring to Sen. Chris Dodd, D-Conn., and House Financial Services Committee Chairman Mike Oxley, R-Ohio.

“But Pat Leahy and Jim Sensenbrenner cant reach a compromise on anything,” this source says.

The differences between the House and Senate terrorism insurance bills on the issue of tort liability are striking.

The House bill, H.R. 3210, calls for significant limitations on tort liability regarding lawsuits filed against American businesses.

These include a prohibition on punitive damages and a cap on fees paid to plaintiffs attorneys.

By contrast, the Senate bill, S. 2600, calls only for procedural reforms. Specifically, under S. 2600, all tort lawsuits arising out of a terrorist attack would be consolidated into a single action adjudicated before a federal court.

Industry lobbyists say this procedural reform, by mandating federal court jurisdiction, would solve the overwhelming majority of problems with tort lawsuits. It would, they say, prevent lawsuits from being brought in states like Mississippi that have a reputation for awarding high punitive damages.

Nonetheless, lobbyists say, some Republicans may insist on a specific limitation on punitive damage awards, which could create an impasse with Democrats.

Another issue is group life insurance. Some group life insurers are seeking to have group life included in the legislation as a coverage qualifying for federal assistance.

Lobbyists say this is causing problems among some Senate staffers, who have accused the industry of “piling on,” that is, trying to expand a bill that should be as narrow as possible.

One lobbyist says it is unclear whether the effort to include group life would help the cause, by bringing in another big constituency to support it, or hurt it, by creating the impression that the industry wants too much.

“I can argue it both ways,” he says.


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 23, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.